P11d returns – Recap on the general principles of what is allowable.

BUSINESS TRAVEL

As we approach the time when employers have to deal with P11d returns, it is worth having a recap on the general principles of what is allowable.

Travel expenses have specific tests which must be satisfied in order for an employee to gain a deduction. These rules are different from the general rule for deductibility of expenses in that they do not need to be incurred “wholly and exclusively”. This is because with any business travel there are likely to be elements of mixed or private purpose, e.g. meals on trips or overnight accommodation. Meals and overnight accommodation come under the heading of “subsistence” and these follow the rules on business travel.

In order for travel expense to be allowable, it must satisfy one of two tests. Either

  • It is ‘necessarily incurred in the performance of duties’ or
  • The travel is ‘for necessary attendance’

Allowable business travel expenses include the actual costs of travel, the subsistence expenditure and other associated costs that are incurred as part of the cost of making the journey. They consist of expenses you are obliged to incur in performing your duties. Tax relief is not normally available on travel costs relating to commuting to and from the normal place of work, or private travel. There are some special rules on Worksite Travel Costs however, where exceptions occur that should be considered.

Road Travel – Use of Private Vehicles

You may claim a cost per mile for allowable business journeys in your own vehicle.  There is a distinction between the first 10,000 miles in any tax year and subsequent miles. The 2018 allowable mileage rates that may be claimed are as follows:

Type of Vehicle Motorcar Motorcycle – all Cycle
First 10000 Miles 45p per mile 24p per mile 20p per mile
10000+ Miles 25p per mile 24p per mile 20p per mile
       

You must retain valid VAT fuel receipts to support your claim. There is currently no HMRC requirement to state the fuel type.

Road Travel – Use of a Hire Car

Occasionally you may need to hire a car, either for a specific journey or if your own car is being serviced or repaired. If you regularly use your personal car for business travel and claim mileage rates you cannot claim the cost of the hire car, you should continue to claim the authorised mileage rates.

If you don’t use your personal car for business and you hire a car in your own name for business journeys for short term use, the hire costs and fuel are an allowable expense. If the hire car is used for personal use a proportion of the hire costs will be disallowable.

Hiring a car abroad specifically for business purposes is an allowable expense and the hire costs and fuel can be claimed.

Rail or Air Travel

The cost of train or airfares for business-related journeys is allowable. Additional costs such as excess baggage claims are also allowable if they are incurred in the performance of your duties and have no personal element.

Other Allowable Travel Costs

Allowable travel costs include bridge, tunnel and road tolls, bus and taxi fares, car-parking charges and congestion charges provided they have been incurred on a business trip.

Overseas Travel Costs

The cost of overseas travel is allowable where you are obliged to incur the expense in the performance of your duties.

Accommodation

The cost of hotel accommodation for nights spent away from home on business may be claimed. The cost of maintaining a rental property may also be allowable provided that use of the property is necessary for business purposes, and a permanent residence is being maintained elsewhere within the UK where a regular pattern of commuting back to that residence is evident. Where a rental property is not used exclusively for business purposes the proportion of costs relating to the period of private usage is not allowable. In such cases it will be necessary to determine the appropriate split of private and business usage and claim only for the business use.

The cost of accommodation in relation to site work is allowable if the period of time at the site is both expected to be no more than 24 months in total, including any time spent on-site prior to the current contract and in fact does not exceed 24 months. The “40% rule” also applies here; claims can be made for accommodation at/near a temporary workplace but never near a permanent workplace.

Incidental Overnight Expenses Allowance

On a business trip you may incur personal costs such as private telephone calls, laundry, newspapers or the cost of childcare. HMRC regards these as personal rather than business expenditure and are not allowable. However, if you are staying overnight while either away on business or on allowable work-related training, you are entitled to claim a subsistence allowance.

There are two Incidental Overnight Expenses Allowance rates: £5 per night in the UK and £10 per night overseas (including Eire). No receipts need to be produced. These allowances can only be claimed in relation to an overnight stay, for example, on a business trip in the UK lasting 5 days with 4 overnight stays, £20 can be claimed.

Incidental Overnight Expenses Allowances in relation to site work are claimable if the overnight stay is associated with a period of time at a site that is both expected to be no more than 24 months in total, including any time spent on-site prior to the current contract, and in fact does not exceed 24 months. The “40% rule” also applies here; claims can be made for accommodation at/near a temporary workplace but never near a permanent workplace.

Meals

When staying overnight meals are an allowable expense. Food and drink must have been purchased after the journey commenced. As a result of this rule costs incurred in preparing a pre-packed lunch are not allowable expenses. The levels of costs that are generally acceptable to HMRC are as follows and claims need to be supported with a valid receipt:

  • Breakfast or lunch: £15 in London and £10 outside London
  • Dinner: £40 in London and £30 outside London

HMRC accepts that reasonable costs of alcoholic beverages with a meal may be claimed. Where you have dined with work associates, only the proportion of the total cost that pertains to you as the director is allowable unless the purpose of the meal is business entertaining. Appropriate identification and explanation of the receipts must be provided in English when submitted in relation to meals overseas.

If you would like to discuss any of this further then please get in touch 0116 2423400 or info@torrwaterfield.co.uk 

Nish Bathia, Director 

14 Days left to submit your 2016/17 self assessment return

The following Tax Events are due on 31st January 2018:

Personal Tax Events

Deadline for submitting your 2016/17 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2016/17 liability together with the first payment on account for 2017/18 are also due.

This deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge liabilities. 

There is a penalty of £100 if your return is not submitted on time, even if there is no tax due or your return shows that you are due a tax refund.

The balance of any outstanding income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2017 is due for payment by 31st January 2018.  Where the payment is made late interest will be charged.

The first payment on account for 2017/18 in respect of income tax and any Class 4 NI or High Income Child Benefit Charge is also due for payment by 31st January 2018.

If we have already dealt with your self assessment return on your behalf you need take no action.

If you haven’t completed your self assessment return yet please contact us, we can help. 0116 2423400 or send us an email info@torrwaterfield.co.uk

Tax Events are due on 19th January 2018

The following Tax Events are due on 19th January 2018:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th October 2017 to 5th January 2018

This deadline is relevant to small employers and contractors only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Where the payment is made electronically the deadline for receipt of cleared payment is 22nd January 2018. In year interest will be charged if payment is made late. Penalties also apply.

PAYE, Student loan and CIS deductions are due for the month to 5th January 2018.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.  

Where the payment is made electronically the deadline for receipt of cleared payment is 22nd January 2018. In year interest will be charged if payment is made late. Penalties also apply.

VAT: Overseas sales

VAT: Overseas sales

Below are some very basic rules of how to deal with VAT on overseas sales. If you ever come across these, please contact us as there are a lot more details which should be reviewed before anything is submitted to HMRC.

The following are basic questions that need to be answered before being able to decide whether VAT should be charged or not:

Are you supplying goods or services?

Are you supplying to a business or a consumer?

Where are they located?

Are they VAT registered?

Goods

EU:

VAT Registered Business-

If the VAT number has been provided by the Business and there is a VAT number on the invoice as well as documentary proof of export, VAT can be charged at 0%.

Non-VAT Registered Business or Consumer-

If the customer is not VAT registered you will have to charge VAT at 20%. However this is only true until the distance selling threshold is exceeded, which depends on the country concerned.

 Outside the EU:

If the Customer resides outside the EU, VAT can be charged at 0%.

 Services

EU:

All VAT and Non-VAT Registered Businesses-

VAT can be charged at 0%, if the service is for business purposes.

Consumer-

VAT must be charged at 20%.

However, if it is an ‘e-service’ you would have to charge VAT at that country’s own rate.

Outside the EU:

All VAT and Non-VAT Registered Businesses-

VAT can be charged at 0%.

Consumer-

VAT can be charged at 0% for the following services:

Electronically supplied services

Advertising

Legal

Accountancy

Consultancy

Supply of staff

Hire of goods

Telecoms and broadcasting

 

VAT must be charged at 20% on all other services.

If you have any queries, or require any further information on this, please do not hesitate to contact us 0116 2423400

Jess Cooper, Accounts & Tax 

Have you become a landlord?

You can become a landlord for many different reasons; you might not even think of yourself as one. This could be because you’ve:

  • inherited a property
  • rented out a flat to cover your mortgage payments
  • moved in with someone and need to rent out your house.

If you follow this link http://bit.ly/2w4rf17 it takes to the gov.uk web page for Guidance on HMRC’s Let Property Campaign.

On the page there are examples of the most common tax errors people make when renting out their property and are all part of the Let Property Campaign which aims to help landlords bring their tax affairs back in to order. These include:

  1. Moving in with a partner and renting your property.
  2. Inheriting a property.
  3. Property bought as an investment.
  4. Relocation
  5. Divorce
  6. Moving in to a Care Home.
  7. Jointly owned investment property.
  8. Property bought for a family member at university.
  9. Armed Forces.
  10. Tied accommodation.

If any of the above apply to you, or if you are unsure whether your circumstances are covered, you can contact HM Revenue and Customs direct or you may wish to discuss matters with us first. Please call us on 0116 2423400

Linda Plumb, Credit Control

Hot Topic Making Tax Digital for Business

The government have issued information on how Making Tax Digital for Business (MTDfB) is expected to work for VAT once the rules are introduced in April 2019.

Under the proposed rules, which have been issued subject to consultation, VAT registered businesses with turnover over the VAT registration threshold will be required to submit their VAT return digitally using software. Businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  • keep their records digitally (for VAT purposes only) and
  • provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software.

It has also been confirmed that MTD will be available on a voluntary basis to other businesses, for both VAT and income tax.

Exemptions will be available where HMRC are satisfied the business is run by a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications, some insolvent businesses; or where HMRC are satisfied that it is not reasonably practicable to make a return using an electronic return system for reasons of disability, age, remoteness of location or any other reason.

The proposed rules include provisions that where a business is in scope for MTD the business must use functional compatible software to meet the new requirements. This software will either be a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software include:

  • keeping records in a specified digital form
  • preserving digital records in a specified digital form
  • creating a VAT return from the digital records and providing HMRC with this information digitally
  • providing HMRC with VAT data on a voluntary basis and
  • receiving information from HMRC via the API platform that the business has complied.

Businesses will need to preserve digital records in the software for up to six years. The digital records include:

  • ‘designatory data’ including the business name, principal place of business and VAT registration number together with information about which VAT accounting schemes they use
  • the VAT account that each VAT registered business must keep, by law, and
  • information about supplies made and received.

Further information on the required information can be found in Annex 1.

The government will make the final detailed requirements available to the software providers by April 2018 to allow time for the software to be developed and tested prior to the rules coming into effect from April 2019.

VAT returns

Businesses within the scope of MTD for VAT will be required to submit their VAT returns using their functional compatible software.

The information contained with the VAT return will be generated by pulling information from the digital records. This information will contain as a minimum the 9 boxes required for the completion of the VAT return but can also contain a specific data set of supplementary information, all of which will be pulled from the digital records.

Businesses submitting monthly or non-standard period returns will be able to continue to do so. The VAT annual accounting scheme will also be retained with the current conditions. Businesses making these types of returns will also be required to keep digital records and submit their VAT returns through software.

Under the new rules some businesses may choose to voluntarily provide further information:

Periodic updates
Businesses will be able to submit VAT information more frequently than their VAT return obligations require on a voluntary basis as a ‘voluntary update’.
Supplementary data
HMRC believes that businesses and HMRC could benefit from the submission of supplementary data detailing how the figures in the return are arrived at. HMRC believe this additional data will help them target non compliance. The software will allow for the voluntary submission of supplementary VAT data as part of a VAT return or a voluntary update. This will allow HMRC to test with businesses the extent to which they and HMRC can benefit from such supplementary data.

Timescale

VAT is the first tax to be reportable under MTD and businesses within the scope of MTD will need to keep their records digitally, using approved MTD functional compatible software, from 1 April 2019. The software will create the return from the digital records and this will need to be submitted under MTD for return periods starting on or after 1 April 2019.

We will keep you informed of developments in this area and ensure we are ready to deal with the new requirements. Please contact us for more information 0116 2423400

Have you got a moment?

pexels-photo-280264 

Have you got a moment?

Do you dread hearing that in your office or, in fact, anywhere?

It invariably means that your plans have just been scuppered and that you will know have to spend a chunk of time looking at something completely different.

Exactly how long is a moment?

I guess I’ve always thought of it as being about 30 seconds but, if you’re looking for a proper definition, my dictionary simply gives it as “a brief period of time”.

It goes on to expand a little and ends with “momentous – of great importance” which implies anything but brief!

It seems from my quick research that in the Middle Ages they had a different concept of time measurement and that a moment would be equal to 90 seconds nowadays.

How should you respond to the initial question?

Clearly it depends who is asking!

My favoured response, used with care, would be something like “Yes – I’ll be with you dreckly!”

OK, so what does that mean?

“Dreckly” is a slang word in common usage in Cornwall.  It would appear to derive from “directly”, which would of course imply an immediate response.  However, in practice it has a meaning accepted to be “at some indeterminate point in the future”.

Now it crosses my mind that everyone has a different view on how many is a few … perhaps I’ll look into that another day.

Neil Ford, Technical Manager

We did it ! 2017 Challenge – The Llyn Peninsula

This year’s challenge was a 46 mile, two day hike around the Llyn Peninsula in Wales.

Having walked similar distances in the past, we thought that we knew what we were letting ourselves in for …

However, we had not anticipated the many obstacles along the way, including:

Ankle deep boggy mud

Steep and slippery climbs and descents

No pubs on route

Wet feet from start to finish

High tide (meaning we had to wade waist deep into the sea)

Cows

Rain

This was probably our toughest challenge so far.  Our support team were unable to relax and had to come to our rescue twice on day one.

Eventually, most of us made it to the finish line (the pub) for a well-earned pint!

We would like to thank everybody that supported and sponsored us.  So far we have raised over £2,000 for our charity of the year, The Alzheimer’s Society.

If you would like to support us, please visit this link: https://www.justgiving.com/fundraising/torr-waterfield1

Some pictures from the walk:

Day 1 – Our team of 10 set off from Nefyn Golf Course:

We made our way along.jpg

We made our way along the coastline, through the mud:

2nd Pic sam k.png

3rd pic.jpg

Stu and the team.jpg

We got a bit wet:

matt.jpg

Look out for the blue signs:

sign.jpg

Seaweed fight:

Brook & Mat Seaweed.jpg

Day 2 – There were a few casualties on day one, our team is down to 5:

day 2.png

Still smiling in the rain:

MCW rain.jpg

Nice views, but still a long way to go:

Views

views 2.jpg

 

Feeding the wild horses: 

Wid horses.jpg

The end:

The End.jpg

If you would like to view some more photos and videos please visit our Facebook page https://www.facebook.com/Torrwaterfield/ 

Stuart Caney, Accounts & Tax 

 

 

ARE YOU THINKING OF SELLING YOUR BUSINESS?

Selling a business can be a lengthy and stressful process. A sale may be considered due to pending retirement, illness, a lifestyle change, or a host of other reasons. The better and more time you have to prepare for a sale, the less stressful the experience will be.

Here at Torr Waterfield, we can help you with the process, from start to finish. Here are a few pointers to help you on your way…..

  • Review the strengths and weaknesses of your business. A SWOT analysis will help you to identify and address the weaknesses and threats, and improve the strengths and opportunities before sale
  • Consider the Key Performance Indicators (KPIs) of the business, and how these can be identified and reviewed both by you and a potential buyer
  • What do you think the business is worth and what is the minimum value you would be prepared to sell it for? Just as importantly, are there likely to be potential buyers willing to pay that minimum price?
  • Consider ways to increase sales and reduce costs in the immediate period prior to sale. A business is often valued on a price to earnings ratio or earnings multiple method, so recent increased profitability can increase its value
  • Consider the infrastructure and management profile of the business, and whether the necessary skills and knowhow are sufficient in the event of your retirement/removal
  • Consider your own tax position and ensure the sale method is the most suitable to you e.g. Entrepreneur’s Relief is available for business asset and share sales fitting certain criteria. This relief allows chargeable gains on sales to be taxed at 10%, even for higher rate tax payers. Other sales methods, such as sale of assets and goodwill, may be more appropriate
  • Consider employee issues in the event of a sale; e.g. does TUPE (transfer of employment rights) apply? How will your employees react prior to and after a sale? Do you advise them of your plans and keep them up to date with progress?
  • Ensure that the position, legal or otherwise, and potential impact on a sale of any minority shareholders or partners has been taken into account
  • Consider what may happen to the business premises; will they be part of the sale? Are they owned by your Personal Pension, in which case it may be worthwhile continuing to lease the premises to the purchaser?
  • Appoint professional advisors and expert help to assist with your valuation, to help with any legal agreements that need to be drawn up and to review your tax position prior to and after the sale

You only sell your business once, so it must be done properly to ensure you get full benefit.

If you would like to find out more about selling your business, please speak to me at Torr Waterfield

Peter Morris , Director _DSC4779

 

A Year out

In 1995 my husband and myself decided to take a year out to travel around the world.

At the time I worked for British Telecom who were kind enough to give me the time off, which meant I had a job to come home to. My husband gave up his job but he did have another job offer for when he came home. We both had two jobs and worked all the hours we could to save up the money for our trip.

When I told my dad I remember he wasn’t very impressed, we had a house, he said we should be settling down to start a family not travelling the world.

We sat down and worked out a rough itinerary of where we wanted to go then went to a travel agent. We said want to go here, here, here and here – what flights can they do for us. A couple of places we were going to involved flying in to one place and travelling over land to fly out from somewhere else.

September 1995 – We were dropped off at Heathrow ready for our adventure, one backpack each with roughly what we thought we might need, and our round the world plane tickets.

The first place we were heading to was Delhi, India, we had no accommodation booked, my dad would have gone nuts if he had known so we didn’t tell anyone. We used the Lonely Planet guide which they call the travellers bible, it is, it has everything you need to know, people who have travelled write it so it has alot of information about things you probably wouldn’t know about.

The places we visited after India were Nepal (Annapurna range Himalayas), Kashmir, Singapore, Taman Negara National Park, Krabi, Koh Phi Phi, Bangkok, Hong Kong, China (Xian, Yangtze River, Tiananmen Square), Australia, New Zealand, Fiji, Hawaii (Pearl Harbour), Los Angeles (where we had some friends arrive from England to finish our trip with us), New York, Washington D.C, Chicago, Alaska (Denali National Park), Canada (Jasper and Banff National Park), San Francisco, Mexico, Yosemite National Park, Death Valley, Las Vegas and the Grand Canyon.

We ended back in Los Angeles were we sold our car, said goodbye to our friends and then made the long journey back to the UK, back to our home and jobs.

It was great to see everyone when we came home because you do miss people especially when it is someone’s birthday or Christmas. We absolutely loved our year out, I think it taught us a lot about ourselves, when visiting other counties you learn to appreciate what you have at home and are grateful for it, you have to learn to be organised with travel, accommodation everything really. You also have to learn respect for other country’s beliefs and cultures.

I found it quite difficult to settle back into normal life after such an amazing year out, but I can honestly say I would recommend it to everyone, it was definitely worth the experience. I learnt a lot which I think I still use today, patience, understanding, caring, being organised, being respectful and listening to people.

Linda Sampson, Credit Control thailand-national-park-2-1386659.jpg